Mortgage rates today are being affected by events in—of all places—Slovakia! After initially rejecting a plan to expand and strengthen the European Financial Stability Fund (EFSF), opposing leaders within the Slovakian government are negotiating to find a compromise that will enable Slovakia to join its Eurozone partners in putting stronger measures in place to deal with the Greek debt crisis. Current mortgage rates are higher today as investors seek the safety of US mortgage-backed securities.
Some analysts are pointing to the Slovakian issue as an example of the danger that exists with the Eurozone. They point out that the structure of the monetary union requires all countries, regardless of size or economic might to approve policy changes unanimously. This creates a very slow process for responding to crises and gives inordinate power to smaller, less significant (economically)nations, which can effectively, hold the rest of the Eurozone hostage.
Today has no economic data due to be released, though the Federal Reserve’s Open market Committee (FOMC) minutes that were scheduled for release yesterday were delayed until this afternoon. As you may recall the last FOMC lasted an extra day, so the release of the minutes is actually now the same number of days following the meeting as is usually the case.
Earnings season began yesterday in the US with a surprise negative announcement from Alcoa. Nevertheless, positive a report from Pepsi helped maintain analysts overall positive forecasts for corporate earnings. Today Chevron will report what is expected to be earnings in-line with their previous quarter. Tomorrow two earnings reports will be closely watched for signals about the strength of the underlying economy: JPMorgan and Google.
Tomorrow and Friday will yield significantly more data to guide the markets. Jobless claims and trade balance figures will be released on Thursday with Friday delivering the key retail sales report. Strong retail sales, which are expected could extend the rise in mortgage rates even further.
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